Debate on cabotage rules in Washington

The organization that advocates for deregulation will hold a conference on Thursday

With or without the Jones Act, it is illegal for someone to work in the United States without a Permanent Resident Card, a work permit, or an employment-related visa. (Pixabay)

Washington - On Thursday, the libertarian Cato Institute – a public policy research organization – will hold a conference on US cabotage rules, an event that will serve to remind the federal government of pending claims – mainly from Puerto Rico and Hawaii – in favor of the repeal or amendment of the Jones Act of 1920.

At a time when Congress still lacks the political will to address the issue and the Puerto Rican government is still considering the possibility of requesting an administrative waiver for the transportation of energy products, executive vice-president of the Puerto Rico Chamber of Food Marketing, Industry & Distribution (MIDA, Spanish acronym), Manuel Reyes Alfonso, will call to seek alternatives and cast aside "the hypocrisy of ignoring the effects of public policy contradictions that have recently magnified the negative effects of the Jones Act."

In an initial presentation published by the Cato Institute, Reyes advocated for strengthening the oversight of the "oligopolies" that control maritime transportation market between Puerto Rico and the United States, which he considers is weaker than international shipping.

The businessmen experience, an analysis of the Federal Reserve Bank of New York and studies done on the island suggest that the cost of transporting cargo on ships that are U.S.-owned, U.S.-crewed, U.S.-registered and U.S.-built between US ports and Puerto Rico, is higher that on international vessels.

Another study funded by the American Maritime Society recently claimed that the statute benefits the Puerto Rican economy.

But Reyes stressed that, because shipping companies are not required to disclose information about private contracts, "there are no reliable public statistics on the actual costs of transportation from the U.S. mainland to Puerto Rico.”

Reyes, whose organization promotes the elimination of the Jones Act of 1920, maintained that knowing the exact costs of federal cabotage rules " is paramount to an island that depends on this traffic, and its absence is actually used by the pro-Jones Act sectors to make all sorts of farfetched allegations based on “confidential data” they alone have access to.”

MIDA executive vice-president stressed in his essay that the same lack of transparency prevents from knowing if adjustments were made after the US Department of Justice accused shipping companies of violating antitrust regulations by agreeing on fixing prices in the Puerto Rico trade between 2003 and 2008.

Reyes asked to assign the Federal Trade Commission and the US Department of Justice the responsibility previously given to the Department of Transportation “to perform an accurate assessment of the anticompetitive features of the markets, would produce a better independent analysis of the situation.”

For Reyes, this would have to be complemented “with the mandatory filing of private service contracts providing any agency with the required data to actually fulfill its statutory goals.”

“These findings and statistics should be published in order to provide transparency to the markets and allow shippers to better negotiate their rates, or even be able to defend themselves using private antitrust claims if supported by the published facts,” added Reyes.

He also warned that “the U.S. carriers that forcefully defend this protectionist law founded most of the international ship registries such as those in Panama, Liberia, and the Marshall Islands, because they do not want to sail under the U.S. flag unless they have guaranteed cargo or a closed market as is the case of Puerto Rico, Alaska, and Hawaii.”

But, he said that, for jurisdictions like Puerto Rico, " the clear lack of competitiveness of the Jones Act fleet directly translates into their own economies’ lack of competitiveness.”

In Puerto Rico, there has been consensus during the past two decades in favor of a full or partial waiver from cabotage rules, which are defended in Congress by both Republicans, in solidarity with shipping companies, and by Democrats, who have allies in the unions associated with the industry.

The Cato Institute conference, in Washington D.C., will bring together around fifteen participants.

For Brian Riley, director of the Free Trade Initiative at the National Taxpayers Union, alleging that the use of U.S. crews protects Americans is “largely a scare tactic.”

With or without the Jones Act, it is illegal for someone to work in the United States without a Permanent Resident Card, a work permit, or an employment-related visa. This is true whether they are transporting merchandise between U.S. ports or employed in any other job,” said Riley in his essay.

Meanwhile, Ted Loch-Temzelides, a Professor of Economics at Rice University, argued that “the U.S. trucking and rail industries, as well as the ports, would be affected in complex ways, if the Jones Act were to be repealed.”